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MR

MDU RESOURCES GROUP INC (MDU)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $315.1M, up 8.8% YoY; EPS from continuing operations was $0.09, up from $0.08 YoY. Consolidated operating income increased to $39.8M from $34.8M YoY, driven by pipeline strength and regulated rate relief, partially offset by higher O&M and depreciation .
  • Versus consensus, MDU delivered a revenue beat and an EPS miss: revenue $315.0M vs $305.0M*, EPS $0.09 vs $0.107*; sequentially, revenue declined from Q2 given seasonality while EPS improved with pipeline momentum .
  • Guidance narrowed: FY2025 EPS range raised at the low end to $0.90–$0.95 (from $0.88–$0.95); long-term EPS growth target maintained at 6%–8% .
  • Catalysts: continued pipeline expansion projects (Minot placed in service, Line Section 32 progressing), 580 MW of signed data center load ramping through 2027, and multiple rate case actions across states; dividend maintained at $0.14 per quarter with 60%–70% payout target .

What Went Well and What Went Wrong

  • What Went Well
    • Pipeline segment earnings rose 11.3% YoY to $16.8M on higher transportation revenues and demand for short-term firm contracts; operating revenues up 11.5% to $57.4M .
    • Regulatory progress: Badger Wind ADP/CPCN granted in ND; rate relief actions across WA, MT, WY with additional filings expected in OR and ID, supporting future recovery .
    • Management narrowed EPS guidance and highlighted long-term drivers: “we are raising the bottom end of our earnings per share guidance to a new range of $0.90–$0.95 per share” .
  • What Went Wrong
    • Electric utility net income declined to $21.5M (from $24.3M) on higher O&M (payroll and outage costs) and higher depreciation despite revenue growth; retail volumes fell 1.6% YoY on cooler summer temperatures .
    • Natural gas distribution posted a seasonal loss of $18.2M vs $17.5M, with higher O&M and depreciation partially offset by rate relief; interest income also declined .
    • Consolidated other income decreased YoY (Q3 other income $7.3M vs $9.0M; nine-month $22.2M vs $31.2M), and interest expense remained elevated ($26.4M in Q3) .

Financial Results

  • Consolidated quarterly progression (sequential comparison):
MetricQ1 2025Q2 2025Q3 2025
Operating Revenues ($USD Millions)$674.8 $351.2 $315.1
Operating Income ($USD Millions)$112.8 $30.4 $39.8
Net Income ($USD Millions)$82.0 $13.7 $18.4
Diluted EPS – Continuing Ops ($)$0.40 $0.07 $0.09
  • Year-over-year (Q3 2025 vs Q3 2024):
MetricQ3 2024Q3 2025
Operating Revenues ($USD Millions)$289.6 $315.1
Operating Income ($USD Millions)$34.8 $39.8
Net Income ($USD Millions)$64.6 (incl. discontinued ops) $18.4
Diluted EPS – Continuing Ops ($)$0.08 $0.09
  • Actual vs Wall Street consensus (S&P Global) for the last three quarters:
MetricQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 ActualQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Millions)$653.1*$674.8 $303.0*$351.2 $305.0*$315.1
Primary EPS ($)$0.363*$0.40 $0.126*$0.07 $0.107*$0.09
EPS # of Estimates3*—4*—3*—
Revenue # of Estimates2*—2*—2*—

Note: Values marked with * were retrieved from S&P Global.

  • Segment performance (Q3 2025 vs Q3 2024):
SegmentOperating Revenues ($M) Q3’24Operating Revenues ($M) Q3’25Operating Income ($M) Q3’24Operating Income ($M) Q3’25Net Income ($M) Q3’24Net Income ($M) Q3’25
Electric Utility$108.5 $117.8 $32.1 $28.4 $24.3 $21.5
Natural Gas Distribution$133.6 $144.3 ($14.7) ($15.0) ($17.5) ($18.2)
Pipeline$51.5 $57.4 $22.1 $24.6 $15.1 $16.8
  • Selected KPIs:
KPIQ3 2024Q3 2025Notes
Electric retail sales volumes (mn kWh)1,166.7 1,148.0 Down 1.6% YoY due to cooler summer
Avg cost of electric fuel/power ($/kWh)$0.020 $0.027 Pass-through items noted
Gas avg cost ($/dk)$6.91 $6.59 Pass-through items noted
Pipeline transportation volumes (MMdk)155.1 160.3 Higher demand and expansions
Utility customer growth—1.5% Combined retail customer growth
Gas retail customer count growth—1.6% Year-over-year
Signed data center load (MW)—580 total; 180 online; +100 MW ramp late 2025–2026; +150 MW in 2026; +150 MW in 2027 Capital-light approach
2025 Capex estimate ($M)—$531 total; Electric $174, Gas $294, Pipeline $63 Net basis

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (FY)2025$0.88–$0.95 (Aug 7, 2025) $0.90–$0.95 (Nov 6, 2025) Raised low end
Long-term EPS growthMulti-year6%–8% 6%–8% Maintained
Dividend per share (quarterly)Q4 2025 declaration$0.14 $0.14 payable Jan 1, 2026 Maintained
Dividend payout ratio targetOngoing60%–70% 60%–70% Maintained
Capex (Total, net)2025$539M (Aug 7, 2025) $531M (Nov 6, 2025) Lowered
Electric capex2025$157M $174M Raised
Gas distribution capex2025$312M $294M Lowered
Pipeline capex2025$70M $63M Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3 2025)Trend
Data center load and technology demandQ1: Higher volumes tied to Ellendale data center; retail volumes +25.1% . Q2: Data centers drove higher electric retail volumes .580 MW signed; 180 MW online; ramp of +100 MW late 2025–2026, +150 MW in 2026, +150 MW in 2027; capital-light service model .Expanding pipeline of large-load customers; staged ramp
Regulatory actions and rate reliefQ1: WA multi-year rate plan; interim MT rates; WY proposal . Q2: WA revision; MT settlement pending; ID GRC filed; WY settlement .MT electric GRC filed ($14.1M); WY electric GRC ($7.5M); ND/SD recovery filings; ID GRC settlement filed; MT gas settlement approved; OR filing planned .Broad-based, constructive
Pipeline expansionQ1: Wahpeton/Line Section 27 projects; Bakken East non-binding open season . Q2: Minot construction; Baker Storage open season review; Bakken East continuing .Minot placed in service (+7 MMcf/d); Line Section 32 progressing to FERC in Q1’26; Bakken East selected for up to $50M/yr commitments; Minot Industrial pipeline agreement .Multiple projects advancing
Macro/Weather impactsQ1: Colder weather aided volumes . Q2: Warmer temperatures pressured gas volumes; utility seasonality .Cooler summer reduced electric retail volumes (-1.6% YoY) .Weather variability persists
Financing and capital markets—Reestablished ATM program; no 2025 equity needs but potential near-term needs for capital plan update later in Nov .Preparing flexibility

Management Commentary

  • “We continue to execute on our long-term strategy as a regulated energy delivery company, with results that demonstrate the strength of our diversified utility and pipeline portfolio” — Nicole A. Kivisto, President & CEO .
  • “We are raising the bottom end of our earnings per share guidance to a new range of $0.90–$0.95 per share… We also continue to anticipate a long-term EPS growth rate of 6%–8% while targeting a 60%–70% annual dividend payout ratio.” .
  • On large-load customers: “At our electric utility, we currently have 580 megawatts of data center load under signed electric service agreements… served with a capital-light business model” .
  • CFO on financing: “We reestablished an ATM program during the quarter… will provide further details around the size and timing of the near-term equity needs later this month” .

Q&A Highlights

  • There were no analyst questions on the call; prepared remarks emphasized guidance, regulatory progress, pipeline projects, data center load ramp, and capital markets positioning .
  • No additional guidance clarifications beyond the raised EPS low-end and dividend policy .

Estimates Context

  • Q3 2025: Revenue beat ($315.1M actual vs $305.0M*), EPS miss ($0.09 actual vs $0.107*). Sequentially, revenue declined seasonally vs Q2 while EPS improved on pipeline strength .
  • Prior quarters: Q2 revenue beat ($351.2M actual vs $303.0M*) and EPS miss ($0.07 actual vs $0.126*); Q1 revenue and EPS beats ($674.8M actual vs $653.1M*, $0.40 actual vs $0.363*) .
  • Implications: Street may raise revenue expectations for pipeline given sustained expansions and demand; EPS estimates may need to reflect higher utility O&M and depreciation, as well as outage-related costs and seasonality; consolidated EPS outlook maintained by management at $0.90–$0.95 .

Note: Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Pipeline remains the growth engine: revenue +11.5%, earnings +11.3% YoY; multiple expansion projects (Minot, Line Section 32, Bakken East selection) support medium-term growth visibility .
  • Utility earnings are pressured by higher O&M and depreciation; regulatory wins and rate relief across several jurisdictions should mitigate and backstop returns through 2026 .
  • Data center load is a multi-year tailwind: 580 MW signed with staged ramp through 2027, pursued with a capital-light strategy; potential for future generation/transmission investment if new agreements progress .
  • FY2025 EPS guidance narrowed upward at the low end; dividend maintained ($0.14 quarterly) with a 60%–70% payout policy — supportive of income-focused holders .
  • Near-term watch items: capital plan update and potential equity needs via ATM; FERC filing for Line Section 32 in Q1 2026; Oregon rate case filing; data center ramp execution .
  • Trading setup: revenue beats versus consensus juxtaposed with EPS misses point to a “quality vs cost” narrative — pipeline strength offsets utility cost headwinds; catalyst path includes project milestones, rate case decisions, and guidance updates .
  • Medium-term thesis: a focused regulated energy delivery portfolio with improving regulatory constructs and visible pipeline growth can drive steady EPS growth toward the 6%–8% long-term target .